The company, with one of South Asia's largest milk products facilities in Maharashtra and Andhra Pradesh, has recently received Rs 155 crore of private equity investments from IDFC Private Equity.

The Rs 875 crore company in revenues for March 2012 will look at raising funds from public through an initial public offering (IPO) to part fund the expansion over the next two years, Shah told reporters in Hyderabad on Monday. As a part of the expansion, the company is also looking at setting up two new facilities, one each in East and Northern regions of the country.

To begin with, the company will expand AP facility at Palamner in Chittoor district to 10 lakh litres a day from 6 lakh litres involving an investment of around Rs 80 crore. The company has so far spent some Rs 110 crore on its facilities in AP.

Parag Milk, which earns close to 85% from value-added milk products and around 15% from liquid milk, is looking at expanding its milk processing capacity to around 5 million litres a day from the existing 2 m litres in phases.

"We are aggressively expanding range of our value-added milk products and brands aimed at an ambitious target of Rs 10,000 crore of sales by 2020 from around Rs 1,200 crore this fiscal. We are also looking at improving our Ebitda (earnings before interest, taxation, depreciation and amortisation) margins to around 14% from 8% now," said Shah.

The Indian milk products market currently stands at around Rs 3 lakh crore with around 10% compounded annual growth rate.

The company currently is earning some 9% of total sales through exports to nearly 25 countries now and is looking at taking the total export revenues to around 30% over the next few years. Though Parag Milk earned some 70% of its revenues from exports few years ago, it had consciously brought down exports focus due to India's uncertain export policies, he said.

Selling cheese, yoghurt, UHT (ultra-high temperature processing) milk under Go brand and fresh milk, ghee, paneer under Gowardhan brand, Parag Milk is also working on introducing couple of new brands for new products range, said senior vice-president Shirish Upadhyay.

Shah hoped that the company's capacity expansion plans should help the distressed dairy farmers in the country in general and AP in particular who were facing frequent milk holidays from the procuring agencies.